Do these trends surprise you or were there signs
they were coming?
LOUIS The pivot point we saw — in what advisors valuedand how they were expressing these values by the firmsthey chose — was right after the financial crisis [of 2007–2008].
Before the crisis, our recruiting data showed that a quality wirehouse team would — 70% of the time — stay in that channel.
Post crisis, as advisors saw that these brands could work totheir detriment, advisors overall just wanted more freedomand control over their businesses. We saw the pivot point forthe opening of these regional firms to pick up market share.
The boutique space used to have Deutsche Bank, CreditSuisse, Lehman and Bear Stearns, and all those firms eitherwent out of business or were sold to larger companies. Theboutique space was kind of missing some really excitinghigher-end options.
Fast forward to around 2017-2018, First Republic becomes areally viable home for top teams. Rockefeller also came alongand has been doing this for a few years.
The financial crisis was the pivot point for when advisorsgave themselves permission on behalf of their clients to consider going to either lesser-known firms or striking out ontheir own and building their own brand. Ultimately, they realized the clients’ relationship was with them and not with theorganization or the name on the business card.
MINDY Looking back, Hightower Advisors was a maverickin this space. When it was first born, it was a very differentmodel than it is today. Today, Hightower is an established RIAbusiness. At first, its target was disenfranchised wirehouseadvisors who wanted a model of supported, quasi-independence with a partnership.
Before Elliot Weissbluth launched Hightower, he came to
our office to pitch the model. I remember saying to him, “That
is never going to fly. No wirehouse advisor is going to go to a
firm they’ve never heard of.”
But he proved me wrong. This was the first firm, despite the
lack of brand name recognition, to show that if advisors could
get what they wanted — more freedom, flexibility, control and
the ability to monetize the business — they’d be very happy to
go and vote with their feet.
Even though Hightower represents a different model today,the model itself is probably one of the most popular modelsthere is due to the notion of supported independence.
Also, in terms of the coronavirus pandemic’s effect, there isno question that the work-from-home initiative absolutely wasa large factor in driving advisor movement. We’ve seen moremovement of top teams in 2020, into 2021 and going forward,driven by a lot of disenfranchisement.
Again, people want more freedom and control, and don’tlike the amount of bureaucracy they’ve been dealing with ordon’t trust their leadership, etc. But [working from] homehas given them the time and privacy to self-reflect and todo their due diligence in a way that they didn’t before. It’salso driven home the notion that “I am not nearly as relianton my branch manager or the infrastructure and support ofmy branch as I thought I was. Maybe I’m more likely to goindependent. I need the big brand name or the big behemothfirm less than I thought I did.” All of those things are drivingadvisor movement.
President of Diamond Consultants
CEO of the advisor recruiting andsearch firm she founded in 1998